General Insurance Article - Hannover Re enables capital markets in Insurance risks

 Hannover Re has again enabled the capital market to participate in (natural) catastrophe risks. The proportional retrocession programme referred to as the "K Cession" was increased by around USD 20 million to USD 350 million. The placement passed off extremely successfully for Hannover Re inasmuch as expiring shares were more than offset by stronger demand – among not only existing but also new investors. Investors made the most of the increased rates for catastrophe risks in the latest renewal season.

 "This transaction serves to complement our traditional retrocession programme which we use to protect against peak exposures such as natural disasters", Chief Executive Officer Ulrich Wallin explained. "Given a normal experience of the covered portfolio, our investors profit from extremely attractive returns. Not only that, they are able to diversify their own portfolio and exclude the interest rate risks normally associated with other capital market products."

 The transaction was placed with institutional investors worldwide and is fully collateralised. The cession rate is roughly 37% and applies to a portfolio comprised of non-proportional reinsurance treaties from the six main zones for natural catastrophe risks as well as the aviation and marine (including offshore energy) lines.

 Hannover Re first enabled investors to participate in insurance risks as long ago as 1995 – the transaction was previously designated "K6".